Gas Generation: Needs and Opportunities

The Gas Transmission System Operator of Ukraine presents a release: "Prospects of Gas Generation in Ukraine and Europe" as part of the "Expert Opinion" project. We are asking professionals from the energy market both in Ukraine and abroad.

Our thoughts: the implementation of ideas for expanding gas-based electricity generation could be the smart solution that helps balance the system in case of emergency situations. However, theoretically, gas generation projects will also be in demand in the future to balance renewable energy sources (RES). Today, Ukrainian experts agree that reducing the potential deficit in the energy system will be achieved through decentralized gas generation.

Ukraine has a well-developed infrastructure for transporting and storing natural gas. The technology for generating electricity from natural gas is simple and well-established. A more active use of gas, compared to coal, not only simplifies the technology and optimizes logistical costs, but also helps the country comply with all external environmental commitments. These thoughts were expressed by Yuriy Boyko, Advisor to the Prime Minister of Ukraine, former Deputy Minister of Energy, and member of the Supervisory Board of "Ukrenergo."

"Several key technical features of gas turbine/gas piston units (GTU/GPU): first and foremost, they have high maneuverability, but relatively low efficiency. They offer quick installation due to their modular design, but today they have the highest cost per kWh compared to technical competitors.

Taking this into account, and considering the current situation in the energy system, it can be said that:

• GTUs will find their place in the short and medium-term perspective in the energy sector;
• The implementation of such projects is critical this year in preparation for the winter period of 2023/24;
• It is not advisable to operate such units in a continuous mode;
• To create economic conditions for the competitive operation of these units, a significant overhaul of the electricity market is needed," concluded Yuriy Boyko.

In the context of implementing such projects, the best approach would be to attract private investments and involve large Western corporations, says Olga Bielkova, Director of Interaction with Government Agencies and International Organizations at the Gas Transmission System Operator of Ukraine.

"We would like to attract private partners who would help make the first high-efficiency gas generation projects successful. For example, Ukraine's gas transmission system can already be considered the foundation for the development of decentralized balancing gas-based electricity generation. This generation could also be located directly at large consumers' facilities. We see our role in supporting a distributed, maneuverable gas transport system to help others make such investments efficiently and quickly and to potentially store excess energy for later use during peak demand hours," says Olga Bielkova.

Given that Russia has damaged more than 50% of Ukraine’s energy infrastructure, and significant parts of the nuclear, renewable, and hydroelectric power capacities are either damaged or still not under control in occupied territories, the best option for balancing the system is the use of existing gas generation capacity, agrees Aura Sabadus, Senior Journalist at the International Energy Organization ICIS.

"This can be an optimal solution in the short term, primarily because gas power stations can be quickly ramped up or down, ensuring stable operation with a lower carbon footprint than coal-fired capacities. Increasing the capacity of gas power stations can also help absorb excess supply, which remains limited due to low domestic demand and the ban on gas exports.

In the long term, Ukraine could consider replacing some old coal-fired power plants with efficient cogeneration gas units that would guarantee backup power during the "green transition" period," comments the expert.

In 2022, Europe, as reported by Aura Sabadus, saw the installation of solar panels and wind turbines as one of the best solutions. Solar power increased by 41 gigawatts, or 25% year-on-year, reaching 209 GW, and it is expected to grow even faster in 2023. Meanwhile, Europe added 19 GW of new wind power, 40% more than the previous year. The EU is expected to build an average of 20 GW annually until 2027.

This is good news for the "green" transition, but it also creates a prospect of volatility in supply and prices, as these types of generation are intermittent and require backup base capacities to compensate for periods when the sun is not shining or the wind is not blowing.

Last year, when Europe experienced the worst drought in the last 500 years, some countries increased the capacity of gas power plants to balance the system, even though gas prices reached record levels.

Regarding practical examples, Leonid Unihovsky, CEO of "Naftogazbudinformathika" LLC, mentions several interesting facts: in September 2022, the Swiss government completed the purchase of 8 mobile gas turbines TM2500 from General Electric, each with a capacity of 50 MW. In addition to gas, they can operate on hydrogen. These will be used to strengthen the country’s energy security. Furthermore, the government is negotiating with other suppliers of mobile power stations. In March this year, the German government announced the start of construction of peak gas power stations with a capacity of 17-21 GW, which can also operate on hydrogen. The planned commissioning date is 2030-2031.

"Thus," the expert notes, "we can already speak about the emergence of 'combined energy' (natural gas plus hydrogen), which will increasingly be used worldwide. At the same time, in the long term, global forecasts indicate a decline in natural gas consumption, including for electricity generation. In this case, the role of backup power will largely be taken over by storage stations, distributed generation, and so-called 'combined energy,' but based on hydrogen."

Predrag Grujicic, Head of the Gas Department at the Energy Community Secretariat, emphasizes that despite strategic initiatives to achieve zero emissions by 2050, Europe should focus more on its own gas production in the context of the policy to refuse Russian supplies. This would increase security of supply within the region. At the same time, the European Community views Ukraine as an important partner in the decarbonization process.

"Aspiring goals have been set for 2030: the production of 30 billion cubic meters of biogas/biomethane in the EU and an equivalent amount of hydrogen. The Energy Community will move forward in this direction, and Ukraine has enormous potential for producing low-carbon gases. The first steps have already been taken, and strategic cooperation between Ukraine and the EU has been outlined in the memorandum of understanding. The Energy Community Secretariat will assist Ukraine in decarbonizing the gas sector."

However, analyzing global electricity markets and modeling more than 190 energy systems using the high-precision PLEXOS software, it is confidently stated that the role of natural gas will persist for a long time. Depending on the region, it may last for ten to fifteen years, predicts Igor Petryk, Market Development Director at "Wärtsilä Energy Business Eastern Europe." Ultimately, it will be replaced by renewable fuels such as green hydrogen or its synthetic derivatives when full-fledged renewable fuel markets with sufficient supply are available.

"Obviously, European countries have different starting positions. For example, Bulgaria or Poland, which are largely dependent on coal, will need to phase out coal-fired power plants and replace them with a combination of renewable energy sources (RES) and maneuverable gas. Therefore, we should expect increased demand for gas during the transitional period, which could last for decades. The transition from traditional energy systems to fully carbon-free systems will be cheaper if, instead of building excess RES and battery storage, we use existing or new gas power stations, such as gas piston plants. These stations will play an important role both in the transition and even in a carbon-free system. They will simply switch to new fuels when it becomes economically viable. Ukraine has a unique opportunity to skip the phase of creating rigid gas generation, which it currently lacks (except for gas-fired heat and power plants and gas-oil units). In the process of rebuilding, it is possible to immediately plan a new energy system in which coal generation will be replaced by a combination of RES and maneuverable gas. This will be a decentralized, distributed energy system, as President Zelensky has mentioned," notes the expert.

It is worth noting that preparations for the next winter should begin now. Considering all possible scenarios and the strengths of Ukraine’s energy system, believes Mykola Kadensky, Head of the Network Development Department of the Gas Transmission System Operator of Ukraine.

"An effective component of operational planning measures to support energy security could be maneuverable mobile generation based on gas turbines. Such technologies are efficient, quickly installed on existing gas infrastructure, and can rapidly provide power in critical situations. This is a reliable backup that will safeguard the entire energy system when needed. Under current conditions, it is necessary to simplify the procedures for launching these capacities. At the same time, after our collective victory, it will be necessary to return to planning and implementing long-term strategies," concluded the expert.